SPX Closes at 1,123...Potential Double Bottom and Bullish Divergence...

After gapping lower and finding support, the SPX filled the gap in the and traded as high as 1,153 during the first hour of trading, before  selling off the rest of Friday, closing down -17.12 at 1,123.53.  The SPX is potentially forming both a double bottom and MACD histogram bullish divergence.

The 1,100 area continues to be an important support level.

Hidden beneath a lower low on the SPX, are several pieces of technical evidence that suggest that the SPX may be near a low.  In addition to the potential double bottom and bullish divergence are these technical indications:

Advancers increased on the NYSE from 178 to 732

Decliners decreased on the NYSE from 2,916 to 2,308

The Euro rose

Stocks in our watch list below falling more than -8% dropped from 35 on Thursday to 3 on Friday

SPY volume dropped by 84 million shares on Friday from Thursday

Volume on the SPY was 273 million shares less on Friday than August 8 when the SPY made its closing low at 112.26, a classic double  bottom decrease

In the NDX 100 there are 33 stocks forming a potential double bottom and a MACD Bullish divergence

There are 33 stocks forming a higher low

There are 28 stocks with lower lows

In the Dow 30 there 11 stocks forming a potential double bottom and a MACD Bullish divergence

There are 11 stocks forming a higher low

There are 5 stocks with lower lows

(click image to enlarge)

NDX inverted hammer at support, below 30 DMA -1.68%

SPX black candle at support, below 30 DMA -1.50%

INDU black candle at support, below 30 DMA -1.57%

COMPQ inverted hammer at support, below 30 DMA -1.62%

RUT inverted hammer at support, below 30 DMA -1.63%

Breadth strengthened, advancers quadrupled on the NYSE but decliners still led advancers 3.15 to 1 on the NYSE and 2.57 to 1 on the NASDAQ …

Exchange       NYSE        NASDAQ

Advancers         732              724

Decliners        2,308           1,866

Index         Change    Close    Direction    Confirmation

VIX               +0.38       43.05      Up               Yes – SPX

SOX              -5.91     326.32      Down          Yes – COMPQ

Leading stocks > +2% on Friday FAZ, SLW, IL, IAG,CDE, VECO, UCO, CHL

Losing stocks < -3.0% included LDK, CROX, MCP, SINA, FWLT, WDC, FAS, STI, INFA, ARUN, C, TSL, ENTR, NTES, UAL, CY, ZION, TPX, GMCR, CAT, URE, CREE, ANF, F, A, PCX, CLF, SNDK, X, SWKS, JDSU, CAM, HUM, TIF, VMW

All nine sectors moved lower on Friday.  Healthcare -0.26%, Consumer Staples XLP -0.47% and Utilities -0.61% were the strongest sectors.

Interest rates TNX closed down -0.12 at 20.71, bond ETF TLT rose 89 cents and Financials XLF was down 25 cents.  The Euro moved up 67 pips to close at 1.4394 at 5 pm on Friday.

SPX

Resistance: 1,134, 1,146, 1,158

Support: 1,119, 1,103, 1,080

The short term 3 day trend is down.

The six-month trend is down.

The twelve-month trend is neutral.

Trade with the trend of the chart you are trading.

Bullish entry signal is a bounce off support and a break above the high of the low day or a break out of horizontal resistance.

Bearish entry signal is a break of short term support or a bounce down from the 30 DMA or other resistance.

AAPL -10.02 – large black candle, below 30 DMA

AMZN -3.59 – inverted hammer, below 30 DMA

BIDU -1.79 – inverted hammer, below 30 DMA

GOOG -13.96 – inverted hammer, below 30 DMA

NFLX -12.27 – large black candle, below 30 DMA

PCLN -9.85 – inverted hammer, below 30 DMA

QCOM -1.43 – black candle at support, below 30 DMA

NDX 100 stocks stronger than the NDX include INTU, MRVL, RIMM, VRTX, ERTS, BIIB, DELL, AMGN, CTSH and SBUX.

Stocks weaker than the NDX include ADSK, MU, FSLR, NFLX, SHLD, STX, GMCR, MYL, NWSA and ALTR.

Stocks to Watch on Monday

Holding Above 30 DMA = 4

FAZ, TLT, CF, CHL

Moving Above 30 DMA = 1

SLW

Moving Below 30 DMA = 2

LDK, ZAGG

Staying Below 30 DMA

CREE, GMCR, NGLS, NTES, CROX, MCP, CDE, DECK, LVS, SOHU, HLF, CAM, CMG, IAG, MHS, MOS, SNDK, SWKS, TPX, V, WTW, ESI, ANF, ATW, COH, FCX, GS, POT, SLB, WLT, NKE, SINA, SWN, ACN, AGU, DOW, UCO, UNP, VMW, CLF, ANR, ATI, CAT, CIEN, CRM, CRUS, CY, DLR, FAS, ICE, JNPR, NDAQ, SMH, STI, TIF, URE, WDC, AKS, CSTR, DE, PCX, TBT, X, ZION, KKD, NETL, DHR, FFIV, SWK, UNG, ARUN, RVBD, HUM, ENTR, INFA, A, F, GES, HAS, BAC, TSL, UAL, VECO, NVDA, FWLT, JDSU, GLW, IL

Intermediate Term Market Trend: Down

Short Term Market Trend: Down